CREAM directors and senior employees used to fly out to Spain to collect the cash takings from huge club nights in Ibiza.

CREAM directors and senior employees used to fly out to Spain to collect the cash takings from huge club nights in Ibiza.

They would return with the cash takings from club Amnesia stuffed into their hand luggage.

The revelation comes on day two of an ECHO special investigation into huge financial irregularities within the nightclub empire.

Yesterday, we revealed how Cream was the subject of a major tax investigation and directors escaped prosecution by paying back #700,000 to the Inland Revenue in a deal struck under a secret procedure known as Hansard.

Those served with Hansard were directors James Barton, Stuart Davenport and Jim King, and former director Darren Hughes.

Mr King, chief operating officer during the Hansard process and the legal fight with the ECHO, has now contacted us asking to make clear that while he was served with Hansard, he was not a director between 1993 and 1999 when the major fraud admitted to the tax investigators took place.

The directors of the club during that period had admitted helping themselves to up to half the club's takings for personal use without declaring it for tax.

It was also revealed they ran a till at the Wolstenholme Square club from which none of the takings were revealed to the Inland Revenue.

Today former Cream financial controller Chumki Banerjee revealed the extraordinary cash transfer system from Ibiza to the UK she found after she joined the group in 1998.

It was when the Spanish-owned club Amnesia was growing into one of Europe's biggest nightclubs and holding Cream nights once or twicea week with members of the Cream organisation on site to collect their share of the takings.

She discovered that directors and senior officials from Cream were collecting the takings - mainly in pesetas - from the on site staff and then flying home with it it their hand luggage. Ms Banerjee was horrified at the way the cash was being handled and said that it was clearly open to abuse.

She said the club had no corporate banking facilities in Spain until she introduced the system in the year 2000.

Prior to that Cream first tried putting the cash into accounts in the names of employees in Spain, witha view to transferring the funds to their UK bank.

That was abandoned because Spanish law imposes a maximum on how much can be deposited in accounts each day. And the limit was far less than the Amnesia takings.

So the unusual cash "transfer" system was introduced.

She said: "Cream's share of income was collected in cash and until 2000 brought back to the UK, at intervals, in the hand luggage of various directors and employees.

"I did not instruct anyone to carry back cash in this manner.

"Any directors that did acted solely on their own initiative.

"The cash could have been kept in ..TEXT: a safe in the club and I had requested that the club banked all the cash and make a bank transfer to the UK.

"There was no dedicated financial person on site, with all the finances managed by the tour personnel, who had no significant financial training.

"The staff on site would calculate Cream's share of income and pass the information on to the finance department in Liverpool.

"However, there were no satisfactory controls in place to confirm the total income taken by the club, especially 'on night' cash income."

It all happened during an incredible boom time for the burgeoning nightclub trade in Ibiza.

The high energy new music scene and the glorious heat of the island was attracting hundreds of thousands of young holidaymakers.

Such was the popularity of the clubs they could afford to pay the best DJs in Europe to fly out and star in the clubs.